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London Discussion on Greece, Eurozone: Key Takeaways

On Friday, February 2015, PS21 hosted a panel discussion in London on Greece, austerity and the future of the Eurozone.

The panel comprised the following:

Peter Apps: executive director, PS21 (chair)

Maria Prentoulis: lecturer, University of East Anglia. London spokesperson, Greek ruling party of Syriza

Tina Fordham: chief political analyst, Citi

Alex White: former official, HM Treasury. Research analyst, Politikos

Paul Taylor: European affairs editor, Reuters

The discussion was off the record to facilitate a full and free exchange of views. Attendees included activists, academics and members of the London financial community.

Below are some of the key takeaways from the conversation from PS21 executive director Peter Apps.

Attendees were largely confident a deal would be found between Greece and its creditors for the immediate bailout (which indeed happened later that day). Going forward, however, there were considerable worries over the future of the Eurozone project are mostly in the medium and long term.

The January election victory of Syriza — a party that then he insisted a year earlier — in Greece was seen as a sign of a wider backlash against establishment parties and figures across Europe and beyond. An untested political party and leadership inevitably faced is the learning curve under very difficult circumstances.

A problem, it was felt, was the opposing political narratives in Greece and other for Eurozone states and those in the centre, particularly Germany are also parts of eastern and central Europe in particular. While Syriza reflected popular Greek sentence that Germany was being unnecessarily harsh, the German political narrative blamed profligate Mediterranean states and gave little room for its negotiators to back down.

In the Greek, it was felt Syriza achieved sufficient (though really very limited) concessions to present a political victory back a wire sticking significantly to meet your requirements. In the longer term, however, are worried that it would become ever harder to “get to yes”.

A Greek exit from the euro, it was felt, would remain utterly disastrous primarily because of the second order affects in other states, particularly runs on the banking system. Financial markets are now pricing a much lower risk of Eurozone breakup compared to 2012. Still, there was a feeling that sometime in the next few years a country might well fall out of the euro with massive financial and geopolitical consequences.

The wider geopolitical situation, however, was also seen a factor, particularly growing tensions on NATO’s eastern flank of Russia. If anything, it was felt that might modestly reduce the risk of the Eurozone allowing the project to fail.

The key country to watch remains Germany, where peripheral parties opposed to further bailouts continue to gain ground. A major shift prior to elections in 2017, however, was seen still remaining unlikely. France will hold elections the same year and Britain may hold its referendum on EU membership if the ruling Conservative party win a general election this year.